Monday, July 18, 2011

In Brown v. Ralphs Grocery Co., ___ Cal.App.4th ___ (Jul. 12, 2011), the Court of Appeal (Second Appellate District, Division Five) addressed the impact of the Concepcion case. The trial court denied a motion to compel arbitration of a representative PAGA action for Labor Code violations, holding that the arbitration clause's ban on class and representative actions was unenforceable in the PAGA context. Slip op. at 4. The Court of Appeal affirmed.

After taking supplemental briefing on Concepcion, the Court of Appeal held that the Federal Arbitration Act, as interpreted in Concepcion, did not preempt California decisional law interpreting PAGA rights as unwaivable:

In short, representative actions under the PAGA do not conflict with the purposes of the FAA. If the FAA preempted state law as to the unenforceability of the PAGA representative action waivers, the benefits of private attorney general actions to enforce state labor laws would, in large part, be nullified.

Slip op. at 12.

One justice dissented from the PAGA holding:

Given the consistent line of [U.S.] Supreme Court cases mandating enforcement of arbitration clauses under the FAA, even in the face of California statutory or decisional law requiring court or administrative action rather than arbitration, I cannot join the majority’s conclusion that the arbitration agreement’s waiver of representative PAGA actions is unenforceable.